I’ve built software. I’ve consulted. I’ve coached. I’ve been an employee. I’ve given interviews. I’ve written papers, blogged and podcasted for years.
None of it compares to backing your own ideas with your own money and doing it for other like-minded people who trust you.
“When you make something truly for yourself, you’re doing the best thing you possibly can for the audience.” — Rick Rubin
I launched my own fund for precisely this reason — to protect and grow my money better than other available options (e.g. buy-and-hold, fundamental stock picking, etc). I wanted to make it available to my friends and family as well. I didn’t want what happened to my colleagues at Bear Stearns to ever happen to me or them.
What is the best thing for a great musician to do? Consult for other bands? Or make great music? It’s an easy answer.
More good comes from making a great product for yourself that you love and need. I need to ride trends, not try to pick bottoms and tops. I need to cut losses, not hope for a rebound. I need a rules-based discipline, not gut-feel or intuition.
It’s a calm rewarding feeling managing money for my investors. I personally know every single one of them. They’re not numbers on a spreadsheet. If they weren’t friends before, they become friends.
“Mike puts his money where his mouth is. He doesn’t tell his clients what to do, but invests right along side all of us. I like that. He lives and breathes his philosophy. It’s not just a job to him.” — Anthony S. [investor of Melissinos Trading]
On a related, but kind of side note — I think it’s important that money managers employ the same (or very very similar) approach as their clients. It increases the odds that the manager will actually give a shit about executing it properly. They’re less likely to buckle if/when a displeased client calls demanding something be changed with the strategy.
I challenge you to ask your wealth advisor what they do with their own money. Do they take the same risks you do? Do they utilize the same approach? Do they do anything differently than what they advise you to do? How did they perform during previous bear markets? When was the last time they changed their approach and why? What kind of returns and drawdowns have they generated?
All of these questions matter before putting money on the line. When you get into some sticky situations, you want to know your money manager cares as much about your money as they do theirs.
— Mike